If some gain and some lose as the result of a proposed change and it can be demonstrated that the value of the gains would exceed the value of the losses then the change is said to be ?
Correct answer: C. potentially efficient
- A. technically efficient.
- B. inefficient.
- C. potentially efficient
- D. unequivocally Pareto optimal
Explanation
A change is potentially efficient under the Kaldor-Hicks criterion when the gains are large enough that winners could theoretically compensate the losers. It is not necessarily Pareto optimal because actual compensation may not occur.
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